Eni Reports Natural Gas Discovery off Egyptian Coast
August 30 2015 - 12:43PM
Dow Jones News
By Eric Sylvers
Milan-- Eni SpA said Sunday it made a massive natural-gas
discovery off the coast of Egypt in what the Italian oil-and-gas
company is calling the largest-ever find in the Mediterranean
Sea.
The gas, estimated at about 30 trillion cubic feet or 5.5
billion barrels of oil equivalent, is in a field about 80 miles off
the Egyptian coast and is enough to supply the North African
country for decades. Most of the gas will be used by Egypt, with
any excess exported, perhaps using a liquefied natural gas plant
that Eni has not far from the field.
If the discovery proves to be as big as thought, it will likely
lead to Eni boosting its production targets for the coming years.
The company had been forecasting that it would find 2 billion
barrels of oil equivalent over the next four years and in the seven
years to 2014 had found 10 billion barrels, less than double the
Egyptian find.
Eni has been prospecting for oil and gas in Egypt for more than
60 years and is the biggest Western producer in both the country
and all of Africa. The company will use existing facilities,
including offshore platforms, near the new find to keep the
development costs relatively low, Eni Chief Executive Claudio
Descalzi said in an interview. A subsea well also will be used to
limit costs.
"This is a confirmation of our strategy of developing
conventional assets in mature areas where we have strong geological
knowledge and where we have synergies," said Mr. Descalzi. "We have
done that very successfully in the past 3-4 years."
It will take several months to sort out the development and
production leases, and drilling is expected to begin early next
year, said Mr. Descalzi, who wouldn't say when production might
begin. If drilling starts in early 2016, production would likely
kick off about a year later based on similar projects.
"We will fast track this project and production will begin as
soon as possible," Mr. Descalzi said. "This discovery is
transformational for Eni and especially for Egypt."
The Leviathan natural gas field off the coast of Israel was the
largest find in the Mediterranean before the just-announced
Egyptian field.
While Eni in recent years has generally sold stakes in its big
finds to share the development costs, that is unlikely to happen
with the just-announced Egyptian field due to the relatively low
development costs, said Mr. Descalzi.
Though natural gas is trading near a 2 1/2 year low, Mr.
Descalzi said that would have no effect on the decision on when to
start pumping the gas from the Egyptian field.
Eni, through an Egyptian subsidiary, has complete control of the
exploration and will have a 50% stake in the production with the
rest held by the Egyptian state oil and gas company.
The Egyptian find is one of Eni's largest ever though it is
smaller than a natural gas field being developed off the coast of
Mozambique.
Write to Eric Sylvers at eric.sylvers@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 30, 2015 12:28 ET (16:28 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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